e. Corporate Name and Limitations on its Use

Corporate Name (Sec. 17)

A corporation’s right to use its corporate and trade name is a property right, it is a right in rem which it may assert or protect against the whole world in the same manner as it may protect its tangible property against trespass or conversion (Philips Export B.V. v. Court of Appeals, G.R. No. 96161, 21 February 1992)¹

Statutory Limitations on Use of Corporate Name (NPC)

No corporate name shall be allowed by the SEC if:

• it is Not distinguishable from that already reserved or registered for the use of another corporation,
• if such name is already Protected by law, or
• when its use is Contrary to existing law, rules and regulations.

Not Distinguishable

A name is not distinguishable even if it contains one or more of the following:

• The word “corporation”, “company”, “incorporated”, “limited”, “limited liability”, or an abbreviation of one of such words; and
• Punctuations, articles, conjunctions, contractions, prepositions, abbreviations, different tenses, spacing, or number of the same word or phrase.

Effects if Statutory Limitations are Violated:

• SEC may summarily order the corporation to immediately cease and desist from using such name and require the corporation to register a new one.
• The SEC shall also cause the removal of all visible signages, marks, advertisements, labels, prints and other effects bearing such corporate name.
• Upon the approval of the new corporate name, the SEC shall issue a certificate of incorporation under the amended name.

Note: If the corporation fails to comply with the SEC’s order, the SEC may hold the corporation and its responsible directors or officers in contempt and/or hold them administratively, civilly and/or criminally liable under this Code and other applicable laws and/or revoke the registration of the corporation.(Sec. 17)²

Other Limitations on the Use of Corporate Name:

• The Corporate Name of the following entities shall include:
• For a Corporation- "Corporation" or "Incorporated," or the abbreviations "Corp." or "Inc."
• For One Person Corporations- “OPC”
• General Partnerships - "Company" or "Co."
• limited partnership, the word "Limited" or "Ltd."
• Professional partnership - "Company," "Associates," or "Partners," or other similar descriptions;
• For Foundations- “Foundation”
• For engaging in microfinance activities - "Microfinance" or "Microfinancing"
• Other words or phrases, authorized by law or other rules and regulations, to be used by specific corporations or partnerships
• A term that describes the business of a corporation in its name should refer to its primary purpose. If there are two such terms, the first should refer to the primary purpose and the second to the secondary purpose.
• If the name is similar to a registered corporation or partnership, the applicant shall add distinctive word/s to the proposed name to remove the similarity from the registered name

Note: This shall not be allowed if the registered name is coined or unique unless the board of directors or majority of the partners gives its consent to the applied name

• A name that consists solely of special symbols, punctuation marks or specially designed characters shall not be registered.
• The name of an internationally known foreign corporation cannot be used by a domestic corporation unless it is its subsidiary and the parent corporation has consented to such use.
• A name written in a foreign language, even if registered in another country, shall not be registered if the name violates good morals, public order or public policy
• The name of a local geographical unit, site or location cannot be used as a corporate or partnership name unless it is accompanied by a descriptive word or phrase.
• The name of a corporation or partnership that has been dissolved or whose registration has been revoked shall not be used by another corporation or partnership within five (5) years from the approval of dissolution or five (5) years from the date of revocation, unless its use has been allowed at the time of the dissolution or revocation by the stockholders, members or partners who represent a majority of the outstanding capital stock or membership of the dissolved corporation or partnership, as the case may be.
• A corporate or partnership name, which was previously used but become the subject of amendment, shall not be re-registered or used by another corporation or partnership for a period of three (3) years from the date of the approval of the adoption of the new corporate or partnership name. An earlier period may be allowed for the registration or use of the former corporate or partnership name provided that the corporation or partnership, which previously owned the used corporate or partnership name, gives its consent.
• Names of absorbed/constituent corporation may not be used unless it is the surviving corporation intending to use the said absorbed/constituent corporate name, or that another corporation may use the names of absorbed/constituent corporation if consent of the surviving corporation is obtained

Doctrine of Secondary Meaning

General Rule: A corporation whose corporate name is a word or phrase which is generally descriptive or geographical cannot prevent another corporation, which uses the same word or phrase as its corporate name, from using such.

Exception: A word or phrase originally incapable of exclusive appropriation with reference to an article on the market because geographically or otherwise descriptive, might nevertheless have been used so long and so exclusively by one producer with reference to his article that, in that trade and to that branch of the purchasing public, the word or phrase has come to mean that the article was his product. (Lyceum of the Philippines, Inc. v. Court of Appeals, G.R. No. 101897, 5 March 1993)³

The Doctrine of Secondary Meaning in corporate law refers to the principle that allows a word or phrase, initially not capable of exclusive appropriation due to being descriptive or geographical, to be exclusively used by one producer in connection with their product. This exclusivity is granted when, within a specific trade and to a particular segment of consumers, the word or phrase has come to signify that the product belongs to that producer. This doctrine was highlighted in the case of G. and C. Merriam Co. v. Saalfield⁴ and further cited in Ang v. Teodoro⁵, emphasizing the legal concept that certain descriptive terms can acquire a secondary meaning through association with a specific product or producer.

Change of Corporate Name

A corporation may change its name by the amendment of its articles of incorporation, but the same is not effective until approved by the SEC (Philippine First Insurance Company, Inc. v. Hartigan, G.R. No. L-26370, 31 July 1970)⁶.

A change in the corporate name does not make a new corporation, and whether effected by special act or under a general law, has no effect on the identity of the corporation, or on its property, rights, or liabilities (Republic Planters Bank v. COURT OF APPEALS and FERMIN CANLAS, G.R. No. 93073, 21 December 1992)⁷.

Other Doctrines: Corporate Name

Similarity in corporate names between two corporations would cause confusion to the public especially when the purposes stated in their charter are also the same type of business (Universal Mills Corporation v. Universal Textile Mills, Inc., G.R. No. L-28351, 28 July 1977)⁸.

A corporation has no right to intervene in a suit using a name other than its registered name; if a corporation legally and truly wants to intervene, it should have used its corporate name as the law requires and not another name which it had not registered (Laureano Investment & Development Corporation v. Court of Appeals and Bormaheco, Inc., G.R. No. 100468, 6 May 1997)⁹.

There would be no denial of due process when a corporation is sued and judgment is rendered against it under its unregistered trade name, holding that a corporation may be sued under the name by which it makes itself known to its workers (Pison-Arceo Agricultural and Development Corporation v. NLRC, G.R. No. 117890, 18 September 1997)¹⁰.

To determine the existence of confusing similarity in corporate names, the test is whether the similarity is such as to mislead a person, using ordinary care and discrimination. In so doing, the court must examine the record as well as the names themselves. Proof of actual confusion need not be shown. It suffices that confusion is probable or likely to occur. (Indian Chamber of Commerce Phils., Inc. v. Filipino Indian Chamber of Commerce in the Philippines, Inc., G.R. No. 184008, 5 June 2017)¹¹

Capitalization – R.A. No. 11232, Section 12¹²

Corporate Term – R.A. No. 11232, Section 11¹³

Classification of Shares – R.A. No. 11232, Sections 6-9¹⁴

The classification of shares, their corresponding rights, privileges, or restrictions, and their stated par value, if any, must be indicated in the articles of incorporation.

Doctrine of Secondary Meaning Applicable to Trade Names

The doctrine’s application has been extended to corporate names since the right to use a corporate name to the exclusion of others is based upon the same principle which underlies the right to use a particular trademark or tradename. (Lyceum of the Philippines, Inc.)¹⁵